Boost VC Just Fulfilled a Crypto Funding Pledge 4 Years in the Making

With the news, confirmed Tuesday by CoinDesk, the San Mateo incubator has finally fulfilled a funding pledge made all the way back in March 2014, when co-founders Adam Draper and Brayton Williams boldly declared they would invest in 100 bitcoin startups over the next three years.

Though it may have taken a bit longer than planned, the milestone is perhaps a testament to the pre-seed fund, which has maintained a major emphasis on crypto since its earliest days, riding the twists and turns of an industry that has changed greatly in just a few short years.

And that’s reflected in the numbers. Depending on how the deals get counted, Boost VC now says it’s made a little over 100 crypto investments. A few of its companies have pivoted away from crypto over time, so Draper no longer counts those toward the total, even if Boost initially wrote its check with the technology in mind.

To that end, however, Draper told CoinDesk in an interview that the philosophy of the fund hasn’t changed.

“It has always been about building the open financial system of the world,” he said.

But a few pivots aren’t a bearish indicator – that’s the national course of investing. For Draper, the crypto portfolio has been a strong net positive.

“In 2017, we started to feel the potential of what this could be, and now that potential is actually being built,” he said.

He acknowledged that enthusiasm has dwindled among his peers in the venture community, but Boost has been through this before. He promised, “We will be writing more checks, because that’s my favorite time.”

And despite hitting its goal, Boost hasn’t quit seeking crypto deals.

Right now, it wants applications for its incubator, which is just one part of its larger investing program. Applications are open for “Tribe 12” now through the end of October (each group of startups goes into a “tribe,” and this will be the 12th such group).

It’s looking for 20 companies to join a three-month incubator, where they will be provided with housing and office space, entrepreneurship coaching and a check from $50 to $100,000.

Results so far

“It’s been super fun,” Draper said of the ride to 100 companies. “You went from being the crazy one to having a group of people who were all crazy with you.”

When Boost made its 100 investment commitment, he said it attracted all kinds of talented entrepreneurs starved for funding and support to Boost. He said they felt like “a beacon,” attracting this gang of believers together in a basement to imagine a new industry.

Three years later, and it has become a real tech sector, with real stakes in the economy. Draper broke down some of the big takeaways from its pool of investments so far.

Additional rounds of funding have been secured by 45 percent of the companies they backed, while 25 percent of the companies are dead. It’s had five crypto exits: Lawnmower (data), Leet (e-sports), Bitquick (distribution), Bitwall (micropayments) and Clevercoin (exchange). (Lawnmower was acquired by CoinDesk).

Swell Rewards, also exited, but that’s an example of a company that Boost backed as a crypto company but that pivoted away from crypto by the time it sold.

The exits so far don’t necessarily indicate big successes though. Venture capital typically looks at a 10-year time horizon for its bets to pay off. So far, its best investments (companies like Protocol Labs, Aragon, Ripio and Wyre) haven’t even approached an exit, because they are just building and growing.

Boost’s failures, Draper said, resulted in focusing on ideas over founders. When an idea was hot and so it rushed to find a founder who was working on that idea, those deals never worked. Now Boost always picks founders over ideas.

In Draper’s view, he’s always looking for founders that iterate. He wants to see constant iteration on product, getting it closer and closer to the users’ true problem. Also, he wants to see founders constant iterating on themselves, working to become the leader their company needs.

Draper said, “Their reason for being in it needs to be pretty strong.”

From bitcoin to crypto

Close watchers of the space will note that there is one way in which Boost amended its pledge. In March 2014, when Draper committed to making 100 investments, he actually said he’d back 100 bitcoin startups. Since then, a lot of the companies its counting are definitely crypto, but they aren’t necessarily built for bitcoin.

“The idea of 100 bitcoin companies — when we announced we were going to back 100 bitcoin companies — that was insane. That was an insane thought,” Draper said. At that time there really wasn’t a distinction between bitcoin and other kinds of crypto, Draper explained.

“There was bitcoin and these whispers of other things, but everyone was trying to keep people focused on the main one,” he said. “We felt that the industry hadn’t focused enough to support divisions in the ecosystem.”

Draper said that was an era when he watched “early adopters being rejected by venture capital,” he said. “I remember other VCs coming up to me and being like: ‘Is that bitcoin thing still a thing?'”

But then ethereum came along and it offered the ERC-20 smart contract, which opened up a new way for funding starved crypto companies to raise money. “It unlocked this door in everyone’s head that said, ‘Hey maybe there can be more than one,'” he recalled.

So, Boost followed the trend and opened up what it was looking for. Mostly it gets equity stakes in companies it backs, but it has also done token deals, such as for Decentraland. Draper said: “We have really done every kind of deal in the space.”

Right now, it’s focused on getting those very early deals, from very new companies it will bring into its incubator. It really emphasizes the fact that it provides both housing and office space, because unlike a lot of VCs it seeks companies from all over the world.

Half of Boost’s portfolio is international, Draper said, explaining, “Which, just working in the cryptocurrency world, you just have to be.”

It’s also key to get them started in Silicon Valley because, he said, “Our thesis has always been: Entrepreneurs are everywhere but Silicon Valley has an infrastructure for founding a company that’s very, very helpful.”

As for what he’s looking for, he and his partners keep an open mind.

He said:

“We’re looking for the craziest most impassioned people building magic.”

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.